The Inter-American Development Bank (IDB), the oldest and
largest regional development bank, was established in 1959 to
promote development throughout Latin America and the Caribbean.
The IDB Group, which includes the Inter-American Investment
Corporation (IIC) and the Multilateral Investment Fund (MIF),
is the main source of multilateral financing for economic, social
and institutional development projects as well as trade and regional integration programs in the Latin America and Caribbean region. Through its loans, grants, guarantees, policy advice
and technical assistance, the IDB Group is a key partner with
each of its 26 borrowing member countries, promoting sustainable economic growth and poverty reduction.
The IIC is a development institution established in 1984 under
the auspices of the IDB to promote the economic development
of its Latin American and Caribbean member countries through
financial support for private enterprise. It particularly targets

small and medium-size companies that have difficulty obtaining financing from other sources on reasonable terms.
The MIF began operating in 1993 to promote broad-based economic growth through private-sector development, particularly in microenterprise and small business. A successor to MIF,
MIF II, was authorized and founded as of March 2007; MIF IIâ&#x20AC;&#x2122;s
purpose is more specifically focused on economic growth and
poverty reduction.

To say that 2008 brought serious economic challenges and uncertainty throughout the
world is certainly an understatement. But, it means that the financing assistance provided
by the Inter-American Development Bank Group to our members and clients is even more
important now than a year ago â&#x20AC;&#x201D; as a bulwark against tough times and to retain the economic development gains that they have worked so hard to achieve.
The Bank is committed to helping the region ride out the recent economic turmoil by working with local authorities to meet the challenges ahead, while continuing to lead with integrity. Recognizing the need to remain focused on sustainable growth and reduction of
poverty, the Bank launched a US$ 6 billion Liquidity Program for Growth Sustainability. This
program provides lending resources to central banks and governments that can be directed
through commercial banks to particular sectors that are facing liquidity constraints. Additionally, the support that the Bank Group gives to small and medium-size enterprises - the
heart of so many communities - as microfinance for those who need just a bit of help, may
now be the only financing lifelines available to them.
So we reaffirm to our member countries, clients and partners our commitment to fulfill our mission and mandate for economic development as we also recommit to the foundation of integrity upon which all such development depends. It is times such as these
that remind us how important it is to stay true to this foundation. With the leadership of the Office of Institutional Integrity, we have
worked hard this past year to enhance and improve integrity tools and practices and to share our results-based knowledge with others. We expect even larger gains in our integrity activities in the coming months, as we implement recommendations from the two
outstanding external reviews that assessed our anti-corruption and integrity frameworks in 2008.
We continue to harmonize our policies with peer organizations and to share best practices and lessons learned with member countries.
This next year we will be rolling out new tools for prevention and becoming more strategic in our investigations. We know that integrity
efforts will make a difference, by increasing portfolio effectiveness directly and by improving our risk - management strategies.
Through the work of the Office of Institutional Integrity, along with other units of the Bank Group, we continue to make clear our
promise to uphold the principles of trust, honor, responsibility, transparency, and integrity for ourselves and for those whom we
serve.

1 The IDB Group is comprised of three institutions: the Inter-American Development Bank (IDB), the Inter-American Investment Corporation (IIC) and the Multilateral
Investment Fund (MIF). The IDB and IIC are public international organizations. The MIF is a trust fund under the administration of the IDB. OII provides services, as
described in this Report, to each of these three entities.

In 2008, the Office of Institutional Integrity (OII) entered its
fifth year of operation. OII, an independent unit of the InterAmerican Development Bank Group (IDB or Bank Group),2 was
created in 2004 as part of the Office of the President, to whom
it directly reports.

internal Ethics Office and hired an Ethics Officer. OII has continued to help with the Bank Group ethics’ programs. OII has
only investigated internal ethics cases at the specific request of
the Ethics Officer or if the cases involved significant allegations
of fraud or corruption.

OII plays a key role in the Bank Group’s integrity programs with
primary responsibility for both investigation and prevention of
fraud and corruption throughout Bank Group-financed activities.3

2. Preventing Fraud & Corruption: A Fiduciary
Responsibility

The Bank Group’s integrity program is derived from its Systemic Framework against Corruption for the Inter-American
Development Bank, a plan adopted by the Bank’s Board in
2001. This framework is based on three distinct, but closelyrelated, areas:
» Ensuring that Bank staff act in accordance with the highest
levels of integrity and that the institution’s internal policies and
procedures are committed to this goal;
» Ensuring that activities financed by the Bank are free of fraud
and corruption and executed in a proper control environment;
and
» Supporting programs that will help borrowing member
countries of the Bank strengthen good governance, enforce the
rule of law, and combat corruption.
Although OII works in all three areas, its principal function is
to help the Bank Group ensure that the activities it finances are
protected from fraudulent or corrupt practices. OII’s resources
are mainly utilized to investigate allegations of fraud and
corruption in Bank Group-financed activities and to develop
outreach and preventive programs.
1. Supporting Internal Ethics Policies & Practices
OII’s responsibilities for supporting internal integrity efforts
have diminished in the past year. In 2007, the Bank created an

OII’s externally-focused efforts have increased. In the past year,
the Office responded to an ever-growing number of inquiries
related to fraud and corruption in Bank Group-financed activities and completed 150 investigations. The Sanctions Committee made final decisions on a series of cases submitted to it by
OII through the Oversight Committee of Fraud and Corruption
(OCFC), further expanding the list of sanctioned individuals
and firms.
This was the second year in which the Bank Group made this
list public. Disclosing sanctions is one of the mechanisms that
reinforces the Bank Group’s message that it will deal severely
with those responsible for the misuse of funds and failure to
comply with its anti-corruption policies.
As in previous years, OII improved the efficiency and effectiveness of its use of human, technological and knowledge-based
resources in its investigative processes.
In 2008, there was also significant progress in the area of
prevention. Following recommendations from the prior year,
OII developed and implemented a new program entitled
Integrity Risks Reviews (IRR) to provide strategic information that will reduce the likelihood of fraudulent and corrupt
practices, and will ensure that lessons learned are applied to
Bank Group operations.
OII made further refinements to the Red Flags Matrix developed
with the Operations Procurement Office (VPC/PDP). This online preventive tool will help Bank staff with early detection of
integrity risks in project design and execution.

2 The Inter-American Development Bank is hereafter referred to as the IDB or the Bank.
3 For a complete list of OII functions, visit: http://www.iadb.org/integrity/mandate.

2 | www.iadb.org/oii

Office of Institutional Integrity | Annual Report 2008

3. Supporting Member Countries with their
Integrity Efforts
OII continued to support the Institutional Capacity of State Division, part of the Institutional Capacity and Finance Sector
(ICF/ICS). This division implements programs and activities in
support of member-country initiatives to strengthen institutional capacity for the prevention of fraud and corruption, among
other things. Particular attention was directed to identifying
and implementing initiatives under the Anti-corruption Activities Trust Fund (AAF).
This Annual Report presents further information on OII’s work
in three strategic areas. Chapter II: Interpreting Our Data
provides summary data and analysis of consultations, allegations, investigations and outcomes; Chapter III: Investigation
offers a sample of the allegations investigated by OII in 2008;
and Chapter IV: Prevention addresses OII’s various preventive activities for the year.
The Report also highlights OII’s collaborative work with other
international organizations with the goal of defining, harmonizing and analyzing common frameworks for anti-corruption
activities as described in Chapter V: International Collaboration and Partnerships.
Finally, Chapter VI: Next Steps addresses the two external reviews of the Bank’s integrity programs that were conducted in
2008. One of these concerned the Bank’s overall “Anti-corruption Framework.” It recommends improvements to the Sanctions Process, responsibilities of the OCFC, and the functions of
OII.4 The second review focuses on the Bank Group’s “Private
Sector Integrity Framework.” To help understand OII’s plans
for 2009 and beyond, this Chapter offers an overview of the
issues and priorities that the Office will focus on during the
coming months.

Bolivia.Illimani (Source: Hernán Charosky)

4 This publication is located at http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=1824265.

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 3

II. Interpreting Our Data

OII’s functions include providing information on the results of
its investigative activities. This section contains summary data
on the inquiries and allegations received in 2008, comparative
information with previous years, a summary of the case flow —
from the inquiry stage to resolution — and resulting sanctions,
among other data.

Who Made New Allegations

Inquiries: Consultations and Allegations

Figure 2. Source of Allegations 2004-2008

In 2008, OII received 222 inquiries, of which 122 were classified as allegations and 100 were classified as consultations.

100%

In 2008, 18% of the new allegations were made anonymously;
71% were made by third parties; and the remaining 11% came
from Bank Group staff.

90%
80%

figure 1. Total Inquiries Received 2003-2008

70%

250

60%
212

200

183
142

150
100

222

10%
0%
2005

2006

2007

2008

The continued growth in consultations indicates that OII is
recognized as a resource in preventing fraud and corruption.
The increase in the number of allegations and consultations
may in part be a reflection of the success of OII’s outreach
activities as well as, perhaps, the public nature of the Bank
Group’s sanctions’ list.

4 | www.iadb.org/oii

23%
10

%

21%

20%

2004

71%

77%

50%

30%
95

2003

64%

40%

157

50
0

52%
65%

25%

25%

12

11%

2004

2005

Anonymous

11%

%

2006
Bank Staff

15%

18%

2007

2008

Non-Bank Staff

Office of Institutional Integrity | Annual Report 2008

Confidentiality of the Investigative Process5
The Inter-American Development Bank’s provisions to guard
confidentiality in investigations include:
The Bank Group protects the confidentiality of complainants.
All staff involved in an investigative process are obligated
to preserve and protect the confidentiality of the subject,
the witnesses and all other parties concerned.
Any staff member who compromises the confidentiality
of a complainant is subject to disciplinary action.
The Bank Group accepts anonymous allegations.

How New Allegations Were Submitted
OII has multiple ways in which interested parties may submit
inquiries related to potential issues of fraud and corruption. As
described in figure 3A, these include: e-mail, Web site, regular
mail, walk-in, telephone, fax, and hotline.6

Figure 3A. how allegations were submitted 2008

Web site
23%

Protection for Whistleblowers and Witnesses
Maintaining the integrity of the Bank’s administration and
operations, including the Bank Group’s systems for
administrative investigations and resolution of disputes,
requires the active support of all Bank employees.
To ensure that the staff has every confidence that they can
come forward without repercussion, the Bank has a Staff
Rule entitled Protection for Whistleblowers and Witnesses
that prohibits reprisal against a staff member for having
submitted a complaint or participated in an investigation.

E-mail
43%

Walk-in
6%

Telephone
11%

Regular Mail
14%

Hotline
2%

Fax
1%

5 Confidentiality generally means that the distribution of information shall be limited to those Bank officers who require knowledge of a matter in the performance of their official functions. The sharing of information is subject to the Bank’s internal policies and procedures, including the Bank’s policies on the disclosure of information. Persons dealing with the Office of
Institutional Integrity are free to ask any questions regarding the treatment of information they may provide.
6 Information on how to contact OII is provided on page 29.

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 5

Figure 3b. how allegations were submitted
2006-2008
100%

5%

23%

16%

90%
80%

43%

Some internal allegations are not related to misconduct, but
other types of conduct that may be related to an administrative
or employment regulation. These cases are typically referred to
the Human Resources Department or the appropriate management unit.

2%

In 2008, 81% of the allegations received by OII were classified
as external and the rest as internal cases. The next figure shows
the percentage of internal and external allegations received in
2008.

70%
60%

64%

53%

50%
40%
30%
5%

20%
10%

1%

13%

2%

0%

1%

1%

10%

2006

1%

14%

17%
11%

6%

6%

6%

2007

When the allegations concern misconduct on the part of Bank
staff, the Ethics Officer is responsible for the case. If the Ethics
Officer deems it appropriate, she may request that OII conduct
an investigation into the allegation of misconduct and present
its findings.

2008

Web site

Fax

Regular Mail

E-mail

Hotline

Telephone
Walk-in

In 2008, as in previous years, online (electronic) methods for
contacting OII were the most common, at 66% of the total
allegations.

External versus Internal Allegations

figure 4. EXternal versus INternal allegations
2004-2008
100%
90%
80%

84%

82%
80%

70%

81%

77%

60%
50%
40%
30%

Allegations are classified as external when they are related to
issues of fraud or corruption but do not involve Bank Group
staff, and internal if they involve Bank Group staff, whether for
fraud and corruption or for violations of the Code of Ethics and
Professional Conduct.

20%

23%
18

%

10%
0%

2004
External

6 | www.iadb.org/oii

20%
16%

2005

2006

2007

19%

2008

Internal

Office of Institutional Integrity | Annual Report 2008

Types of External Allegations Investigated
The external investigations that fell under OIIâ&#x20AC;&#x2122;s jurisdiction in
2008, as in previous years, represented a variety of prohibited
activities, although fraud and corruption continue to be the
most frequent violations, at a combined 77% of the total.
It is important to note that the initial classification of allegations by OII is based on the preliminary information in the
allegation. Over the course of an investigation, as more information about the case becomes known, OII may modify the
classification. Eventually, a single case may represent more
than one type of violation.
The next two charts show the types of allegations investigated
in 2008 (figure 5A) and compares them historically over the
past two years (figure 5B).

OII began 2008 with 93 pending external and 4 internal cases,
and over the year OII opened 122 new cases. At the same time,
OII completed 150 investigations â&#x20AC;&#x201C; leaving 69 active cases
open as of December 31. Of the cases completed in 2008, 44
were closed at the preliminary stage (pre-investigation) and
106 after a full investigation. Twenty cases included a recommendation to commence sanctions proceedings.
A total of 22 cases in 2008 were internal and were referred
to the Ethics Officer. Of these, the Ethics Officer asked OII to
investigate 11 and the remaining were deemed closed. Of the
11 cases investigated, nine were completed and two are still
pending. This constitutes a 31% reduction from the 16 internal
cases investigated in 2007.

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 7

Table 1. Active Cases in 2008
Internal

External

Total

Cases pending from previous year

4

93

97

New cases

22

100

122

Total active cases

26

193

219

Cases completed

(24)

(126)

(150)

2

67

69

Cases pending at yearâ&#x20AC;&#x2122;s end

Figure 6A describes the results of 126 external investigations
completed by OII (including cases resolved by preliminary inquiry and those that were fully investigated), with 24% of the
cases investigated in 2008 resulting in substantiated allegations.
figure 6a. outcome of investigations 2008

Of the nine completed internal cases that were subject to a full
investigation, six were substantiated, while two were unsubstantiated and one case was unfounded.

97

Unsubstantiated
38%

Did not involve
Bank funds or Projects
10%

Did not involve Fraud,
Corruption or Misconduct
11%
Other
4%

69
Unfounded
13%

Substantiated
24%

Case Results
OII closed 29% of the cases at the preliminary stage; the rest
proceeded to a full investigation. There are three outcomes in
a full investigation: substantiated, unsubstantiated, and unfounded, as explained below:
What Does It Mean if a Case Is Substantiated,
Unsubstantiated or Unfounded?
At the end of an investigation, OII classifies a case as substantiated, unsubstantiated or unfounded. A case is determined to be:
Substantiated when the evidence sufficiently supports
the allegation that a fraudulent or corrupt practice, as
defined by the Bank Group, has occurred;
Unsubstantiated when the evidence is insufficient either to confirm or deny the original allegation; and
Unfounded when the allegations are determined to be
untrue.

8 | www.iadb.org/oii

Office of Institutional Integrity | Annual Report 2008

figure 6b. Outcome of investigations 2006-2008

figure 7. referrals for unfounded or
unsubstantiated allegations 2008

100%
90%
80%
70%
60%

32%

41%

30%
20%
10%
0%

38%

6%

World Bank
Country
2%
Departments
12%

Office of the
Executive
Auditor
(AUG) 2%

Country
Office
50%

7%

50%
40%

Operations Procurement
Office (VPC/PDP)
24%

13%
37%

30%

24%

2%

4%

12%

11%

11%

13%

9%

10%

2006

2007

Independent
Investigation
Mechanism
(IIM) 2%

Legal
Departments
(LEG) 4%

Board of Executive
Directors
4%

2008

Unsubstantiated
Unfounded

Other

Substantiated

Did not involve Bank funds or Projects

Did not involve Fraud, Corruption or Misconduct

Even when the outcome of the investigation shows that the allegations were unfounded or unsubstantiated, the evidence collected is analyzed by the prevention area to identify integrity
risks and provide lessons learned to other Bank departments.
This process is described in detail in Chapter IV. Roughly 50%
of the reports involving unfounded or unsubstantiated cases
were referred to different units within the Bank or to outside
agencies, as shown in figure 7.

Sanctions
In cases that are substantiated, OII may recommend that the
OCFC forward the case to the Bankâ&#x20AC;&#x2122;s Sanctions Committee. The
Sanctions Committee and in some cases the OCFC7 will determine whether or not a company or individual has been involved
in acts of fraud, corruption, collusion or coercion,8 and whether
it will be subjected to administrative sanctions, which range
from letters of reprimand to permanent debarments.
Before making a decision on whether to impose a sanction, the
Sanctions Committee notifies the subject of the investigation
and provides the firm or individual with an opportunity to respond to the charges with all relevant information within a set
period of time.
Debarred companies and individuals are ineligible to participate in Bank Group-financed contracts. Debarments may be
permanent or temporary. Other sanctions may also be imposed,
such as a reprimand or perhaps specific conditions may be established for future contracts. Sanctioned entities are listed
publicly on the Bankâ&#x20AC;&#x2122;s Web site.9

7 The Sanctions Committee has jurisdiction over all cases involving bidders, suppliers, contractors, or consultants who are alleged to have engaged in fraud or corruption in connection
with a Bank-financed project. The OCFC has jurisdiction over all other cases. Both Committees follow the Sanctions Procedures to adjudicate cases. See Annex II for further overview of the
investigations process. For a deeper understanding of the investigative and sanctions processes, please visit OII Web site: www.iadb.org/oii.
8 These definitions are found in Annex I.
9 http://www.iadb.org/integrity/SanctionList.cfm.

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 9

The Bank has no authority to investigate public officials or violations of local laws. In those instances where there may be a
possible violation of national laws, the Bankâ&#x20AC;&#x2122;s President may
direct that the results of an investigation be sent to national
authorities.

Sanctions and other Activities after
Investigations: Update on Cases Included
in Annual Report 2007
In the 2007 Annual Report, 14 of the cases described in Chapter III: Investigative Cases and Outcomes 2007, were pending resolution â&#x20AC;&#x201D; one under the jurisdiction of the OCFC and
the rest under the Sanctions Committee. Of those 14 cases, in
2008 the OCFC imposed a sanction on one individual and the
Sanctions Committee resolved three cases in which sanctions
were imposed on 11 individuals and five companies, ranging
from letters of reprimand to debarment.

10 | www.iadb.org/oii

Sanctions Cases 2008
In 2008, sanctions were imposed on a total of 33 companies
and individuals, as shown below. At the end of the year, 21
cases were pending before the Sanctions Committee.
Table 3. Sanctions Imposed in 2008
Type of Sanction
Letter of
Reprimand

Debarment

Length of
Sanction

Individuals

Firms

1 month

3

1

1 year

4

2

1 year

2

1

2 years

2

3 years

3

3

4 years

4

1

5 years

4

10 years

3

Total

25

8

Office of Institutional Integrity | Annual Report 2008

III. Investigation

OII is, as mentioned earlier, responsible for all investigations
related to fraud and corruption in Bank Group-financed activities. The Office follows the Principles and Guidelines for Investigations10 that were developed and endorsed by leading International Financial Institutions (IFI). If a firm or an individual
is found to have violated the Bank’s anti-corruption policy, OII
may recommend to the OCFC that a Notice of Administrative
Action be prepared and submitted to the Sanctions Committee,
which may, in turn, suspend the respondent’s eligibility to work
on a Bank Group-financed project. A detailed chart describing
the investigation process is presented in Annex II.

Cases and Outcomes
As delineated in Chapter II, external cases comprised 81% of
the cases investigated in 2008, with fraud and corruption as
the leading allegations. Cases often involve more than one
violation. Other violations include embezzlement, bribery,
misrepresentation of qualifications, conflict of interest and manipulation of the bid process. Below is a sampling of some of
the cases investigated in 2008.11

Fraud and Extortion
FALSIFIED REQUESTS FOR REIMBURSEMENT
An anonymous source provided information that a company
in a Bank Group-financed project was invoicing the Executing
Agency (EA) for reimbursement of employee salaries that exceeded what they were really paying their employees.

After presenting the evidence, the respondents admitted the
fraudulent charges.
Outcome: A Notice of Administrative Action was issued and
the company was temporarily suspended from participating in Bank-financed activities pending completion of sanctions proceedings. The value of the contract signed by the
EA and the firm was US$ 269,219.
Contracts Awarded to a Fictitious Company
An EA conducted three bidding processes using a price-comparison method, and invited four, supposedly independent,
firms to submit price quotes. At the end of the bidding process,
three contracts were awarded to the same company.
The investigation determined that of the four bids, two had
been submitted by the winning company, which had used a different name for one of the bids; one came from a fictitious applicant that had “borrowed” the name of an existing company;
and the last was from a company that could not be located. A
detailed analysis showed that the four bids contained the exact same typographical errors, indicating that they had been
prepared by the same person. Additionally, none of the bids —
other than that of the winning company — provided the name
of a representative, a corporate address or any other reliable
contact information.
Outcome: A Notice of Administrative Action was issued
and forwarded to the Sanctions Committee. The value of the
contracts awarded to the one company was US$ 155,924.

At first, company representatives denied these facts; however,
a review by OII of the disbursement requests, invoices, checks
and the company’s list of payments showed otherwise. The
respondents had in fact submitted fraudulent documentation
concerning reimbursement for wages and salaries. The company and its representatives not only tried to overcharge the
EA for amounts paid to project staff, but they also made the
staff sign receipts for amounts greater than what they actually
received.

10 http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=832313.
11 Internal cases are the responsibility of the Ethics Office (EO). However, the EO may request OII’s assistance for an investigation when it believes it is necessary. For more information
on internal cases referred to the annual report of the EO.

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 11

Nonprofit Beneficiary Involved in Fraudulent
Practices
An allegation claimed that a beneficiary of two technical cooperation agreements was systematically withholding a percentage of its consultants’ salaries. While the consultants issued
invoices for the total amounts due, they received reduced payments with receipts for “donations” of the missing amounts
made out to the beneficiary.
Outcome: The investigation revealed that the “donations”
were not voluntary, but instead constituted an unavoidable
condition of employment for the consultants. A Notice of
Administrative Action was issued. The value of the technical cooperation agreements was US$ 600,000.

Conflict of Interest and
Manipulating Bid Documents
Submission of Offers with Confidential Information Obtained Inappropriately
Two companies submitted proposals to the EA that included
confidential information with the precise financial value of bid
elements. This information had been improperly obtained by
these companies, in clear violation of the confidentiality of the
bidding process.
The investigation revealed that the two companies had photocopied the confidential information, and included the exact
amounts of a price list in their financial proposals. Early detection mechanisms employed by the EA revealed the attempted
fraud, and the case was referred to OII.

Collusion
Contractors Paid in Advance then Cancelled
Contracts
Three firms were awarded contracts by an EA, all for the same
project, but the companies cancelled their contracts shortly
after receiving advance payments for the work. The companies claimed that the EA had delayed in obtaining the required
municipal work permits and in designating inspectors. These
companies also maintained that there were design changes
that would affect the deadlines for completion, and that they
had not received financial compensation for the cost increases
related to the work delays. The three firms filed for arbitration.
OII verified that a businessman, who neither had a formal title
at any of the companies nor any related, tangible financial interest, was acting as the representative of all three companies.
OII also determined that this businessman did have financial
interests in common with the arbitrator selected by the EA,
casting doubt on the impartiality of the arbitration process and
indicating the possibility of fraudulent behavior, but the evidence was not conclusive.
The fact that the companies cancelled their contracts after
receiving advance payment for the work could indicate that
the firms likely had no intention of fulfilling the contract. Ultimately, however, the EA admitted partial responsibility for the
events.
Outcome: After OII’s investigation, one of the firms
came to an agreement with the EA to complete the work.
The details of the investigation were forwarded to the
COF and the management of the Country Department.
The value of the three contracts was US$ 8,593,929.

Outcome: A Notice of Administrative Action was issued and
forwarded to the Sanctions Committee. The value of those
contracts was US$ 966,335.

12 | www.iadb.org/oii

Office of Institutional Integrity | Annual Report 2008

Misrepresentation of Qualifications

Falsification of Documents to Win a Contract

Fraudulent Curricula Vitae

As part of a Bank-financed project, an EA conducted various
selection proceedings for the purchase of agricultural materials at the end of which a total of 17 contracts were awarded to
a single company.

A company submitted a bid for a consulting contract that contained three Curricula Vitae (CVs) for consultants who would be
performing work under the contract. The consultants later filed
complaints to the effect that the information in their CVs had
been modified by the company, exaggerating their experience
to obtain additional points in the evaluation. The company had
indeed won the contract based on the higher score generated
by the altered CVs.
OII interviewed the consultants who confirmed that the information in their CVs was false.
Outcome: A Notice of Administrative Action was issued
against the company and its legal representative, who had
submitted the false information. The Sanctions Committee
has debarred both for three years. The value of the contract
awarded to the company was US$ 116,389.
Forged Certificates
A COF forwarded to OII a letter from an EA indicating that a
consulting company had submitted a forged certificate regarding successful completion of a project that it had included on
its qualifications. The submission was part of the expression
of interest by the firm for a project under public bidding.
OII confirmed that the certificate in question, as well as other
certificates submitted by the firm, had been falsified. All the
certificates had been issued by government agencies, but the
essential information, such as the names of the participants in
the project, the work performed, and any penalties imposed on
the company, had been forged. The government agencies that
had issued the original certificates provided copies of these to
OII, and investigators confirmed that the documents submitted
by the bidder had been altered.
Outcome: A Notice of Administrative Action was issued and
forwarded to the Sanctions Committee. The total value of
the five different contracts was US$ 435,017.

Office of Institutional Integrity | Annual Report 2008

The investigation process revealed evidence that the contract
bidding process had been manipulated. OII discovered a series
of falsified bids, forged signatures on bids, bids from phony
companies, bids from companies owned by the same individual, bids from companies that were not registered on the
tax rolls, and bids from companies whose legal representatives
could not be found.
Outcome: Despite these facts, the evidence was insufficient
to prove that the company that had been awarded all the
contracts had participated in the fraudulent practices. OII
drafted recommendations to the Bank Group operational
areas involved in order to reduce the risk of the recurrence
of such fraudulent practices in future projects with similar
bidding processes. The total value of the 17 contracts was
US$ 701,319.

Bribery
Attempted Bribery
A COF forwarded a complaint to OII about a contractor on a
project financed by the Bank. The contractor had allegedly
made a deposit into the personal bank account of the program
director at the EA.
After OIIâ&#x20AC;&#x2122;s investigation, the contractor declared that the deposit had been made to the program directorâ&#x20AC;&#x2122;s account because the director had threatened to delay the project if he did
not receive the funds from the contractor. The program-director
admitted to the deposit being made into his account, but he
claimed that he had not been aware of it. The director asserted
that the contractor had filed a bribery complaint after receiving very poor performance evaluations from the director for
his work on the project.

www.iadb.org/oii | 13

Outcome: The EA removed the program director from his
post. A Notice of Administrative Action was issued and forwarded to the Sanctions Committee. The value of the contract was US$ 268,973.
A Cartel Establishes Contract Prices and
Organizes Fraudulent Bids and Bribes
OII initiated an investigation of allegations that a group of
construction companies had organized a cartel for bidding on
Bank-financed contracts at inflated prices, while presenting it
as a legitimate competition. The investigation confirmed the
existence of cartel activities as well as regular demands for
the payment of bribes from the cartel by municipal officials;
the awarding of contracts prior to the beginning of the bidding
process; the centralization of bids, with contract pricing determined by cartel leaders; and fraudulent disqualification of
bidders that were not cartel members.
A systematic review of Bank documents revealed further
evidence of additional coordination between cartel bidders.
This included bids with prices that were inflated when compared
with market conditions; the submission of rigged bids for
government-procurement contracts, designed to reflect an
appearance of competitive values; false information in the bid
documents; and the rotation of bids among the cartel members.

Biddersâ&#x20AC;&#x2122; Attempts to Manipulate Outcomes
Collusion and Falsification
Public officials and consultants working in an EA responsible
for increasing transparency in government acquisitions agreed
to manipulate two hiring processes. In one case, the applicants
pretended to have specific qualifications by coordinating the
content of their respective CVs, and the winning bidder lied
about its experience. In the other case, the winning bidder submitted background information on two colleagues who did not
want to participate in the competitive bidding, and the bidder
forged their signatures. In both cases, the EAâ&#x20AC;&#x2122;s evaluation
committee claimed, falsely, that they had interviewed all
applicants.
Outcome: A Notice of Administrative Action was issued and
forwarded to the Sanctions Committee. The total value of
the two contracts was US$ 49,262.

Outcome: A Notice of Administrative Action was issued and
forwarded to the Sanctions Committee. The Bank loan in
question was valued at approximately US$ 56 million.
OII estimates that the value of the misappropriated funds is
in excess of US$ 2,000,000.

14 | www.iadb.org/oii

Office of Institutional Integrity | Annual Report 2008

Iv. Prevention

In 2008, OII made significant progress in enhancing the Bank’s
efforts to prevent fraud and corruption. Prevention is defined
as the ability to use information to improve the Bank Group’s
knowledge regarding prohibited practices, deter misconduct
and enhance policies, mechanisms and operations to prevent
integrity risks within Bank Group financed activities.

The main sources of information to conduct these reviews include:
Inquiries, consultations, allegations, and cases investigated
by OII.
Documents from the project cycle preparation and execution, including the Project Performance Monitoring Reports
(PPMR).
Reports and documents from the Office of the Executive
Auditor (AUG) and the Office of Evaluation and Oversight
(OVE).
Reports from external audits of Bank projects.
Reports from National Oversight Agencies.
Key interviews of both Bank staff and that of Executing
Agencies.

In line with recommendations from its own case-review
process, OII’s prevention area invested its resources in the
analysis and development of preventive measures based on
the specific needs of different regions and sectors within the
Bank Group. Some of the major achievements for the year included the development of the Integrity Risks Reviews (IRR)
program; enhancements to the Red Flags Matrix, developed
jointly with VPC/PDP; and expanded support to privatesector operations within the Bank Group.

Integrity Risks Reviews (IRR)
In 2008, OII launched a new process that begins with the
analysis of information gathered from allegations and investigations, which is combined with other relevant sources of information to create Integrity Risks Reviews.

The IRR includes both analytical information and the identification of risks and recommendations on how to mitigate or prevent those risks. The diagram below explains the IRR process.

In 2008, the prevention area produced two Integrity Risks Reviews, one at the request of the Social Sector (SCL) and one
for a Country Department, with specific focus on Bolivia. The
Knowledge and Learning Sector (KNL) provided critical support
for these activities through financing, advice and evaluation of
the IRR’s training components.
To respond to the demand from SCL, an IRR was prepared
containing a full review of the allegations and investigations
received by OII for that sector. SCL also requested that OII staff
provide support to a project team to incorporate fraud and
corruption prevention measures at the project-design stage.
At the request of Country Department Andean Group (CAN),
the Office carried out an analysis of integrity risks for the region and conducted a similar analysis specifically for Bolivia. In
each case, the reviews included detailed presentations to the
officials of the sector and the region.
By the end of 2008, OII had received a request from an additional country. In 2009, OII plans to provide this type of analysis to other sectors and regions.

Support for Sectors and Country
Departments
Social Sector
OII’s support for SCL started as a partnership with the Social
Protection and Health Division (SPH). In 2007, OII and SCL
joined forces with Transparency International to edit, publish
and distribute in Spanish, Informe Global de la Corrupción:
Corrupción y Salud (2006) [Global Corruption Report:
Corruption and Health (2006)].
At the beginning of 2008, a technical workshop to present the
report was organized by OII and SCL in conjunction with the Institutional Capacity of State Division (ICF/ICS). The workshop
convened sector specialists, experts in health and in corruption,
and various civil-society groups that monitor public-sector
accountability. The meeting led to a broad dialogue on common types of corrupt practices as well as discussion of strategies to identify and mitigate such practices.

16 | www.iadb.org/oii

Key outcomes of the workshop included identification of the:
Most common types of corrupt practices, based on cases
investigated by OII, such as falsification of professional
qualifications, manipulation of the selection process for
consultants, fraud in contract performance, diversion and
misappropriation of funds, and intimidation of complainants and witnesses.
Sources of information to develop early warnings and the
establishment of data-gathering practices to increase early
detection.
Best practices across public-sector agencies, civil-society
groups and professional organizations that lead to improved
transparency in the execution of health-sector projects.
At the request of SCL, OII prepared an IRR for its three divisions: Social Protection/Health, Education, and Science and
Technology.
The review helped to single out frequent types of fraud and
corruption, including those already identified in the workshop.
The results of this IRR were made available to staff from SCL at
HQ as well as in Country Offices (COFs).
SCL then asked OII to provide support to one of its teams that
was working on the preparation phase of a specific health
program. OII contributed to the project preparation with recommendations to prevent some of the most common fraudulent
and corrupt practices to ensure transparency, while maintaining cost effectiveness for the project.
Some of the recommendations proposed include:
Better use of public-information tools to increase citizen
monitoring of procurement activities (publicizing the terms
of reference, selection processes, circulating information
among professional associations and citizens).
Enhanced information exchange between the executing
agency, the project team and OII on early warnings and red
flags.
Improved efficiency in the project’s audit and evaluation,
including execution milestones and expected results.

Office of Institutional Integrity | Annual Report 2008

Country Department Andean Group (CAN)
During the second half of 2008, CAN, the EO and OII undertook
a joint project to increase the capacity of COFs and EAs in the
identification and prevention of integrity risks. This work
resulted in OII’s second IRR.

Manipulation of selection processes, unjustified increases
in the scope of work and political pressure in hiring consultants.
In light of these findings, OII proposed the following preventive
measures to be carried out in the immediate term in Bolivia:

The main goals of the initiative were:
Increase awareness among staff as to the magnitude and
characteristics of fraud and corruption in Bank Groupfinanced activities in the Andean Region as a whole and later
in Bolivia in particular, as well as increase awareness on
issues related to staff conduct.
Provide information on the types of cases investigated by
the EO and OII, as well as the main lessons learned from
these cases and how staff should react to other indicators
of integrity risks.
Establish a work routine between the EO, OII and CAN to
facilitate preventive activities.
Drawing on OII’s and EO’s databases of allegations and investigations in the Andean Region, the initial IRR covered all five
countries. Its main findings and recommendations were then
presented to staff at both HQ and COFs, followed by a questionand-answer period.
Once OII presented CAN with a region-wide IRR, a second,
more in-depth IRR for Bolivia was prepared. CAN, VPC/PDP, OII
and EO put together a team that worked closely with COF staff
to prepare and deliver an in-country workshop. The presentation combined a full day of training to deliver the results of the
IRR, and strategies and practices to help prevent the identified
risks.
The IRR identified the most common factors that contribute to
the fraudulent practices and risks obtained from OII’s country
investigations:
Institutional weaknesses in the EAs.
Falsification of documents and qualifications in the selection process.
Weaknesses in the monitoring of projects due to minimal
internal and external control, particularly in decentralized
projects.

Office of Institutional Integrity | Annual Report 2008

Implementing and strengthening existing procedures to
verify key documents in the procurement processes.
Strengthening mechanisms for consulting on issues of integrity or for reporting allegations by business, professional or
civil-society organizations.
Enhancing visibility and availability of information about the
Bank’s procurement policies and its integrity provisions.
Improving dissemination of audit and evaluation results.
Increasing the capacity of EAs to identify and prevent integrity risks.
Increasing public awareness of the Bank’s integrity rules.

The Red Flags Matrix
In 2008, OII and VPC/PDP completed development of the Red
Flags Matrix. This Matrix is an interactive tool designed primarily for Fiduciary Specialists to help them with early detection
and prevention of fraudulent and corrupt practices in project
procurement (see diagram 2).
The Red Flags Matrix was incorporated into the Bank Group’s
new project procurement database called the “Procurement
Plan Execution System” (SEPA). A pilot presentation of the
Matrix was provided to Fiduciary Specialists gathered at the
Bank Group’s fiduciary forum in the fourth quarter of 2008. It is
scheduled to be launched in February 2009 in a select group of
countries. The pilot phase will include a joint training program
by VPC/PDP and OII.

What?
• A web-based tool for procurement hosted by SEPA
----------------------------------------------------------------------------------------• Assist Fiduciary Specialists with the detection and prevention
of typical acts of fraud and corruption

Why?
• To increase prevention of prohibited practices in the
procurement process
-----------------------------------------------------------------------------------------• To equip Fiduciary Specialists with a simple and practical tool
for managing integrity risks

OII’s objective is to release the Red Flags Matrix as a webbased, interactive instrument with online support that will
facilitate the ability of Fiduciary Specialists to identify risk
factors and to consult with VPC/PDP and OII on mitigating
these risks before they develop further.

outset of each potential transaction, investment officers identify potential integrity risks, including information related to
politically-exposed persons, the identity of business owners
who are potential customers, anti-money-laundering policies
and procedures, and the adequacy of “know your customer”
information when dealing with a financial institution. Any red
flag identified through this due-diligence process is evaluated
by the project teams and brought to the attention of OII
for further review and, if necessary, additional fact finding. OII
then works with the project teams to complete appropriate informational research, to find ways to mitigate or eliminate the
identified risks and to ensure that the development objectives
of the transaction can be achieved. This process also allows the
Bank Group to identify and prevent any related reputational
risks in these private-sector transactions.
Over the course of the year, OII was consulted on an increasing
number of transactions, indicating a growing awareness of the
importance of integrity in private-sector activities. This assistance activity has been supplemented with training, which OII
is responsible for offering to investment officers to build their
basic skills in the implementation of the Integrity Framework.
OII also worked closely with the IDB and IIC Legal Department
to ensure that the documentation and structure of privatesector transactions are aligned with and satisfy the Bank
Group’s integrity requirements.
Finally, the recommendations of the first external assessment
of the Bank Group’s Integrity Framework for the Private Sector
are expected to be implemented in 2009.

Integrity in Private-Sector Operations
The Bank Group has several windows that provide privatesector financing, including the Structured and Corporate
Financing Department, the Multilateral Investment Fund,
the Opportunities for the Majority, and the Inter-American
Investment Corporation. OII works closely with each of these
units in the prevention of integrity risks within the Bank
Group’s Integrity Framework for Private Sector Operations.
The Framework requires, among other obligations, that at the

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 19

Other Activities
Anti-corruption Activities Trust Fund12
In March 2007, the IDB signed an agreement with Norway to
establish the first Anti-corruption Activities Trust Fund (AAF).
The primary objective of the AAF is to strengthen the institutional capacity of the Bank’s borrowing member countries to
prevent and control corruption by supporting the design and
implementation of policies, mechanisms, and/or practices that
promote access to information.
The AAF will provide 30 million Norwegian kroner (approximately US$ 5 million) over a period of three years. The key
areas covered by the Fund include: budget and public-records
management; contracting and procurement procedures, financial institutions, extractive industries, political-campaign
finance, the judicial system and the health sector.
Technical responsibility over the AAF resides within the Institutional Capacity of the State Division (ICF/ICS). OII participates,
with ICF/ICS and the Grants and Co-financing Management
Unit (VPC/GCM) in the AAF’s Technical Review Committee, the
entity responsible for selecting proposals submitted for consideration to the AAF. During 2008, the Committee reviewed
more than fifteen expressions of interest for non-reimbursable
technical-cooperation projects.
Activities with the Inter-American Investment
Corporation (IIC) to support Small and Mediumsize Enterprises (SMEs)13
In 2008, the IIC requested assistance from OII to create an
integrity section in the Innovative Financing for Small and
Medium-size Enterprises (FINPYME). FINPYME is “a diagnostic
methodology developed to assess small and medium-size enterprises (SMEs) in order to help them become more competitive
and improve their access to potential sources of financing.”

FINPYME diagnostic reviews make it easier to identify factors
that positively or negatively affect wealth and job creation or
economic development through improved efficiency in SME
management and productive processes or through optimization in the consolidation of corporate projects.
The integrity section in FINPYME is intended to gather data
on key transparency and accountability issues that may affect
SMEs. FINPYME is designed to couple the diagnostic results
with technical assistance to improve the performance of individual firms.
In addition, IIC and OII have partnered to conceptualize a
new SME-Focused Integrity program, in furtherance of IIC’s
Memorandum of Understanding with the World Economic
Forum’s Partnering against Corruption Initiative (PACI).
The initiative is also being developed with the assistance of
Transparency International. The objective is to create
integrity-related instruments and capacity-building programs,
specifically adapted to the needs of small and medium-size
enterprises in Latin America, with the potential for use with
SMEs throughout the world. The program will include training
and tools to help develop, publicize and apply ethics and
integrity in SMEs throughout the region, with the goal of
creating a more reliable market environment.

Communication
In 2008, the Office continued its efforts to expand outreach
and communications regarding integrity. OII developed a plan
to standardize its various outreach materials. OII promoted
a greater awareness of the Bank Group’s policies on integrity
through organization of and support for publicity activities,
such as training for Bank staff and participating in activities
prepared by the Office of External Relations (EXR) to inform the
business community about conditions for doing business with
the IDB.

One of OII’s communication products is this annual report,
which is widely distributed to COFs, partners, EAs, project coordinators and other participants in the day-to-day administration of Bank Group-financed activities. In 2008, OII redesigned
its outreach brochure and used this to help educate audiences
about the Bank’s integrity standards and activities, including
the ways in which inquiries could be made. With widespread
distribution of the brochure and an enhanced Web site, it is
hoped that all potential business partners will be made aware
of the Bank Group’s commitment to integrity from the very
beginning of any project cycle.

The OII Web site
As stated in Chapter II, it is important to emphasize that 23%
of the inquiries submitted in 2008 were received through the
Web site — a large jump over 2007. Without a doubt, the Web
site plays an important role in OII’s preventive mission — allowing interested parties easy access to information regarding
integrity, fraud and corruption. Currently, the Web site includes
the annual reports, the names of sanctioned firms and individuals, and information on the investigative and sanctions procedures. The site will be revised and updated in 2009.

The scope of OII’s outreach was extended through improved
communications with local entities (for example, oversight organizations, civil societies, news media and business associations)
including information about fraudulent or corrupt practices, or
evidence related to allegations.

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 21

v. International Collaboration and Partnership Activities

OII continued working with integrity offices at other multilateral development banks and associations to harmonize
and improve integrity programs by sharing best practices.

Activities with Multilateral Development
Banks (MDBs)
OII organized a series of meetings in 2008 with MDBs to share
information and best practices and to promote a better understanding of the Bank Group’s external and internal integrity
policies.
During the first quarter, OII hosted a meeting with sub-regional
development banks in Latin America, including the Central
American Bank for Economic Integration (BCIE) and the Corporación Andina de Fomento (CAF). This meeting helped build
mutual awareness of respective integrity policies, their internal
and external impacts and best practices as applied to private
and public-sector fiduciary activities.
Given the success of these exchanges, the IDB, together with
the African Development Bank, the Asian Development Bank,
the European Bank for Reconstruction and Development, the
European Investment Bank and the World Bank, organized a
second, similar meeting among sub-regional development
banks worldwide. The IDB acted as an organizer and hosted
the meeting.
Fourteen sub-regional MDBs from the Americas, Europe, Africa,
Asia, and the Middle East met at IDB headquarters to discuss
some of the key challenges in implementing integrity policies.
The discussions were framed within the Uniform Framework
for Preventing and Combating Fraud and Corruption, adopted
by several of the international financial institutions, including
the IDB Group. The Uniform Framework promotes harmonization, mechanisms for exchanging information and developing
joint educational and training courses.

22 | www.iadb.org/oii

Over the year, OII recognized the importance of exploring additional ways to strengthen ongoing anti-corruption harmonization efforts among multilateral development banks. To
achieve this, OII participated in several meetings to analyze
other possible areas of mutual interest including a mandatory
requirement for bidders and providers on Bank Group-financed
projects to divulge any sanctions imposed by other multilateral
development banks or national authorities, and the exchange
of information on fraud and corruption.

Bank Group Partnerships
IDB Fiduciary Forum
OII participated in the Second Fiduciary Forum with VPC/PDP,
which was attended by Fiduciary Specialists from throughout
the Bank. OII and VPC/PDP unveiled the Red Flags Matrix and
briefed attendees on how this tool will be implemented and
utilized. OII shared relevant experiences about fraud and corruption with these specialists.
Institutional Capacity of State Division
The Institutional Capacity of State Division is the unit responsible for leading Bank support to countries for developing public sector institutional capacity, including strengthening governance and transparency and combating corruption. To support
member countries’ programs and activities against fraud and
corruption, OII assisted ICF/ICS project teams in preparing and
updating a series of technical cooperation agreements intended to implement anti-corruption conventions in the countries
of the region.
OII also worked with the ICF/ICS team that drafted the cooperation plan to support the “Latin American Regional Conference: Commitment and Cooperation in the Fight against
Corruption and International Bribery,” organized by the government of Mexico. This conference addressed advances and
challenges related to the compliance of Conventions. ICF/ICS
and OII provided detailed information on the ways in which
the Bank Group supports strategies against corruption in
member countries.

Office of Institutional Integrity | Annual Report 2008

Joint Activities with The Office of the Executive
Auditor (AUG)
To promote an exchange of ideas, experiences and challenges
about government and risk-management auditing, OII worked
in coordination with AUG on a variety of different activities. In
addition, OII, AUG, OVE, and the EO formed an ad-hoc committee to discuss common issues and exchange information on
matters related to governance and integrity.

Other International Collaborations
VIII Assembly of the Latin American and the
Caribbean Organization of Supreme Audit
Institutions
The heads of the Supreme Audit Institutions from throughout
Latin America and the Caribbean, at a meeting organized by
AUG, discussed with OII and others the most relevant issues
related to their mandates and work programs. Information
on best practices, cases and reports was also shared and exchanged.
International Federation of Consulting Engineers
Conference on Preventing Fraud and Corruption

International Investigators Conference
OII chaired a discussion on advancing harmonization among
multilateral development banks into the broader community of
international financial institutions and the United Nations, during the 9th International Investigator’s Conference.
This annual meeting continues to be one of the most important
gatherings of integrity officials from multilateral banks, the
United Nations, and other international organizations. Some
of the subjects discussed were: due process in conducting investigations; interview methods; using technology to improve
investigations; and external reviews of investigative offices.
13th International Anti-Corruption Conference
OII led a workshop addressing “The Fight against Corruption
at the MDBs” and had the opportunity to participate in meetings with industry leaders during the 13th International AntiCorruption Conference titled, “Global Transparency: Fighting
against Corruption for a Sustainable Future.” This biannual
conference hosted representatives involved in the fight against
corruption from the government and private sectors, as well as
civil society.

The IDB, the World Bank and the International Federation of
Consulting Engineers (FIDIC) organized a two-day training
course on preventing fraud and corruption and the related links
to preventing environmental damage in development projects
financed by multilateral banks.
During the training, OII and VPC/PDP’s presentation introduced
a series of interactive, practical cases. Attendees included staff
and consultants from MDBs and members of civil organizations, who were able to interact and resolve situations based
on real cases.
Building on these joint efforts, the Chief of OII participated in
the FIDIC annual conference, providing the full membership
with an overview of the Bank Groups integrity framework. The
presentation was followed by an open discussion on how the
consulting engineering community could join forces with the
Bank to promote integrity.

Office of Institutional Integrity | Annual Report 2008

www.iadb.org/oii | 23

vI. NEXT STEPS

The Way Forward
In 2008, OII made significant strides in both its prevention and
investigative arenas of responsibility — notably in creating and
implementing a new integrity risk prevention program and in
updating and enhancing investigative procedures.
In 2008 the Bank Group’s integrity programs were the subject
of two external reviews. The first review concerned the Bank’s
“Anti-corruption Framework” and its report with recommendations was submitted to the President in November.
This report was conducted by a team led by Richard
Thornburgh and Jorge Santistevan de Noriega, and it is
available at: http//idbdocs.iadb.org/wsdocs/getdocument.
aspx?docnum=1824265
Senior Management committed to engage in a dialogue with
the Board of Executive Directors to receive input on prioritization and to define an implementation plan in 2009.
A separate review was conducted by Deloitte Financial Advisory Services LLP of the Bank Group’s “Private Sector Integrity Framework.” Under the direction of the Vice President
for Private Sector and Non-Sovereign Guaranteed Operations
and OII, a working group has been constituted to study and
implement the recommendations on how to improve the Bank
Group’s integrity due diligence mechanisms in its private sector lending activities.
In 2009, OII will draft a proposal for the investigations section
that envisions a more dynamic and selective role for the team.
This will include the possibility of developing a “triage” approach to case selection — which will allow OII to dedicate its
limited resources to investigating high-impact cases that carry
a strong likelihood of a future deterrent effect — and generating
a lessons-learned knowledge base that can be shared with the
members of the IDB Group.

The Bank Sanctions Committee has completed its first two years
of operations. As suggested in the external review, the Bank
will explore alternatives to the Committee’s current structure,
including potential changes in membership and the addition of
a Case Analyst. The implementation of the recommendations
from the external reviews will be among OII’s most important
activities in 2009.
In the area of prevention, OII will launch the Red Flags Matrix
pilot program that was developed in conjunction with VPC/
PDP, with plans to roll it out to more COFs over the course of the
year. The data collected by the Red Flags Matrix will be used to
support improvements in the design and supervision of Bank
products, thus improving the Bank staff’s capacity to reduce
integrity risks.
As the Bank Group revises its internal IT systems, OII will be
able to resume its Data Mining project that will further enhance and supplement the data collected and analyzed in the
Red Flags Matrix and IRRs leading to the creation of a comprehensive, robust knowledge base.
In cooperation with the EO, PDP and ICS, OII’s prevention team
will continue its efforts to identify and reduce integrity risks in
Bank Group’s operations, by sector and by country, through additional Integrity Risks Reviews. The basis for analysis will be
expanded to include not only the results of OII investigations,
but also data generated by the Red Flags Matrix.
OII will pursue efforts in fiduciary reform and will actively participate in IDB working groups dealing with risk management
and fiduciary systems. This will ensure proper definition of
risks of fraud and corruption as the Bank makes progress with
its new matrix structure.
We recognize that resources are often limited; each year OII examines and evaluates its ability to achieve greater efficiency in
its programs and activities in support of the Bank Group. It will
continue to seek a balance of efficiency and efficacy in these
challenging economic times.
As ever, the fight against fraud and corruption, and the efforts
to maintain integrity as a moral and cultural norm, are part of
ongoing review and careful improvement.

24 | www.iadb.org/oii

Office of Institutional Integrity | Annual Report 2008

ANNEX I: DEFINITIONS14

The Bank defines, for the purpose of this provision, the terms set forth below:
A corrupt practice is the offering, giving, receiving, or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party;
A fraudulent practice is any act or omission, including a
misrepresentation, that knowingly or recklessly misleads, or
attempts to mislead, a party to obtain a financial or other benefit
or to avoid an obligation;

A coercive practice is impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the
property of the party to improperly influence the actions of a
party; and
A collusive practice is an arrangement between two or
more parties designed to achieve an improper purpose, including influencing improperly the actions of another party.
These definitions were developed to address the most common types of corrupt practices and are not meant to be exhaustive. The Bank has the authority to act in any instance
of fraud and corruption, even if it is not explicitly included in
these definitions.

OII prepares
Notice of
Administrative
Action for
Sanctions
Committee
to send to
Respondents

Respondent
has 60 days
to file written
response

OII has 20
days to file
reply

Respondent
has 20 days
to file second
reply

Copies of
Notice of
Administrative
Action are
also given to
the member
of the Board
of Executive
Directors for
the country of
residence of the
Respondent

OCFC: Oversight Committee of Fraud and Corruption

Sanctions
Committee
makes
decision and
determines
any sanction

Names of
sanctioned
parties and
type and
length of
sanction will
be posted on
the BankÂ´s
Web site

OII: Office of Institutional Integrity

Respondent

Sanctions Committee

* Cases involving private-sector lending activities or investment by the Multilateral Investment Fund are not referred to the Sanctions Committee: rather, OCFC retains
juridiction throughout the process.

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Office of Institutional Integrity | Annual Report 2008

Consulting with OII or reporting a violation

Allegations of fraud or corruption can be
reported confidentially and securely:

Allegations may also be made to the Bank Group President,
vice presidents, managers, senior management of the IIC, MIF,
or to the IDB Group Country Office Representative in each of
its borrowing member countries, as well as to the Bank representatives in Europe and Asia. Allegations of staff misconduct
should be reported to the Ethics Officer.
What Happens Next

Step 1. Dial access code provided below for the country
you are calling from.
Step 2. You will be asked to dial or provide the number
that you would like to call.
Step 3. Dial or provide the number 877-223-4551
Country

Access code

Country

Access code

Argentina

0-800-555-4288

Haiti

183

Bahamas

1-800-872-2881

Honduras

800-0-123

Barbados

1-800-872-2881

Jamaica

1-800-872-2881

Belize

811

Mexico

01-800-288-2872

Bolivia

800-101-110

Nicaragua

1-800-0174

Brazil

0800-890-0288

Panama

800-0109

Chile

800-255-288

Paraguay

008-11-800

Colombia

01-800-911-0011

Peru

0-800-50-000

Costa Rica

0-800-0-114-114

Suriname

156

Dominican Rep.

1122

Trinidad & Tobago

1-800-872-2881

El Salvador

800-1785

United States

1-800-255-5288

Ecuador

1-999-119

Uruguay

000-410

Guatemala

99-99-190

Venezuela

0800-2255-288

Guyana

159

To view the full list of countries, visit www.iadb.org/oii.

Office of Institutional Integrity | Annual Report 2008

After a report is filed, all allegations are reviewed by OII and
reported to the Oversight Committee on Fraud and Corruption
(OCFC). OII does not reveal the source of the allegation(s) to
anyone outside of OII.
OII conducts a preliminary review of cases of alleged fraud and
corruption before beginning an investigation, asking the following questions:
Does the allegation concern any activity financed by the
Bank Group?
If the allegation were true, would it constitute a violation of
the Bank Group’s prohibition against fraudulent or corrupt
practices?
Does the allegation provide sufficient credible information
to warrant an investigation by OII?
If the answer to each of these questions is yes, OII may conduct a full investigation and report its findings to the OCFC for a
determination of whether the matter should be referred to the
Sanctions Committee and what further action, if any, is
warranted.

office of institutional integrity annual report 2008

in 2008, the office of institutional integrity (oii) entered its fifth year of operation. oii is an independent unit of the inter-american development bank group (idb or bank group). during 2008 oii¿s responsibilities for supporting internal integrity efforts have diminished. in 2007, the bank created an internal ethics office and hired an ethics officer. oii¿s externally-focused efforts have increased. in the past year, the office responded to an ever-growing number of inquiries and completed 150 investigations. this was the second year in which the bank group made this list public. disclosing sanctions is one of the mechanisms that reinforces the bank group¿s message that it will deal severely with those responsible for the misuse of funds and failure to comply with its anti-corruption policies. additionally, oii improved the efficiency and effectiveness of its use of human, technological and knowledge-based resources in its investigative processes. in 2008, there was also signifi...